Build an all weather investment portfolio
3 February 2016
As you become a long term investor, you will have sunny days and you will have rainy days. It’s easy to make hay while the sun is shining but are you prepared for when it rains? The post Build an all weather investment portfolio appeared first on Aspect Buyer's Agency.
As you become a long term investor, you will have sunny days and you will have rainy days. It’s easy to make hay while the sun is shining but are you prepared for when it rains?
Building a portfolio for SMSF investment or your own portfolio needs to have few fundamentals in order to be an all weather investment portfolio.
Choosing the Correct Asset
There is always a flight to quality when times get tough. Even during poor market conditions, recessions, (depressions) people are still working, making money, living their lives and need somewhere to live or run their business. Choosing an asset that will always be in demand will ensure you can weather the storm. Sound research and professional guidance along the way can help you make informed decisions.
Acquire property in the right Structure
Many investors will acquire properties in their own name. Those investors who are well informed will use different vehicles or structures to acquire their property. SMSF Property Investment (Self Managed Super Funds) are the most well known and offer a lot of benefits. Seeking guidance from property investment advisors may give your portfolio the edge it needs to be a robust investment vehicle. The correct ownership structure can give you asset protection, estate planning opportunities and the ability to legally minimize tax obligations.
Have a Financial Buffer
The banks will generally insist on a cash deposit or other assets to secure their loan to you. This is often the bare minimum that the banks need to keep them out of trouble if your portfolio falls over. The real question is how much buffer you need to keep you personally out of trouble. Building property portfolios takes time and money. The money you may get back, but the time is gone for ever. Having a financial buffer will allow you to handle the pressure of interest rate increases, vacancies, property damages or difficult lending conditions. Having equity in your portfolio will put you in a position to buy when the market is weak and vendors are under pressure.
